Fabert v. Hot Spur Partners, No. 2004AP1209 (WI 9/14/2005)
| Decision Date | 14 September 2005 |
| Docket Number | No. 2004AP1209.,2004AP1209. |
| Parties | Calvin Fabert, Plaintiff-Respondent-Cross-Appellant, Terry Fabert, Plaintiff-Respondent, v. Hot Spur Partners, LLC, Defendant-Appellant, Richard F. Beere, Defendant-Appellant-Cross-Respondent. |
| Court | Wisconsin Supreme Court |
Before Snyder, P.J., Brown and Nettesheim, JJ.
¶1
The principal issue in this case turned on whether Calvin Fabert quit his employment with Hot Spur Partners, LLC, or was terminated by its majority owner, Richard F. Beere. Calvin claimed he was fired; Beere says he quit. The jury believed Calvin.
¶2 Beere and Hot Spur Partners now appeal from the judgment entered on the jury verdict finding that Beere intentionally interfered with and conspired to injure Calvin's business interests, that Hot Spur Partners was unjustly enriched due to uncompensated services performed by Terry Fabert, Calvin's wife, and that Calvin converted $12,573 worth of Hot Spur Partners' property. The Faberts cross-appeal from the portion of the judgment in which the trial court refused to allow evidence of Beere's wealth and to send the punitive damage claim to the jury. Finding no error, we affirm in all regards.
¶3 Richard Beere is a wealthy businessman; Calvin Fabert knows horses. In late 1999, the two formed a limited liability corporation, Hot Spur Partners, LLC. The January 2000 Operating Agreement recited that Hot Spur Partners was organized for the purpose of "buying, selling, training, racing and stabling" horses. The horses, standardbred trotters, would be raced primarily in Wisconsin and Illinois.
¶4 Beere and Calvin were the sole members and initial managers of Hot Spur Partners. Beere contributed $9900 and held 99% ownership. Calvin, whose duties came to include "everything from breeding, to racing" the horses, was credited with a $100 contribution for 1% ownership. The Operating Agreement
also recited that electing or removing a manager or entering into an employment agreement with anyone, including a manager, "shall require the prior approval of Members owning more than 50% of all Member Interests in the Company."
¶5 In January 2000 Calvin's wife, Terry, also began working for Hot Spur Partners. A year later their son, Andy Lapp,1 followed suit. Terry and Calvin both worked at least fifty to sixty hours a week. Terry's duties included helping to care for the horses, cleaning stalls and doing the bookkeeping. In addition to his other responsibilities, Calvin's duties also included control of employee salaries. Terry was not paid at all the first year, but did not consider herself a volunteer. Calvin and Terry approached Beere several times during that first year about paying Terry. In 2001 she was paid approximately $18,000; in 2002 about $19,685; and in 2003—until she was let go in March—about $4530.
¶6 In October 2000, Hot Spur Partners and Calvin entered into an Employment Agreement. The Employment Agreement provided that it would continue "until terminated," which meant, among other possible scenarios:
(d) Upon no less than thirty (30) days' written notice by the Employee to the Company;
(e) Immediately upon Employee's malfeasance, theft, embezzlement or intentional destruction of any property or rights of the Company ...; or
(f) Immediately upon removal of the Employee as a manager of the Company by the members of the Company pursuant to the Company's operating agreement.
¶7 Under the terms of the Employment Agreement, Calvin was to be paid an annual salary of $60,000 plus 50% of the horses' race purses. Total purses for 2000 and 2001 were about $139,000. Winnings dropped in 2002 due to horse injuries and track refurbishing.
¶8 Dovercrest Farms is another of Beere's business interests. Several years earlier, Beere began raising sheep there. Beere testified that Dovercrest was profitable "[a]nytime we didn't raise animals," but that it ceased to show a profit. He also testified that although the losses increased each of the past few years, he "[d]efinitely" was "still in Dovercrest."
¶9 Bruce Rowntree was an employee of Dovercrest Farms. Beere knew Rowntree's father, who had a neighboring farm. When Rowntree's father died young, Beere hired Rowntree to work for him. Rowntree became "like a son" to Beere. At the time of this action, Rowntree had been working for Beere for approximately thirty years and Beere was Rowntree's primary source of income. Rowntree's only responsibility in regard to Hot Spur Partners basically was to keep the barn stocked with feed, although various workers testified that Rowntree was at the stables nearly every day.
¶10 Rowntree and Calvin never got along. Rowntree was heard to say, and did not deny at trial, that he deliberately did things to irritate Calvin. Terry testified that Rowntree would "just ... show up sometimes ... [and] would bring the tractor in," distressing the horses. She also testified that Rowntree threatened Calvin on numerous occasions and, toward the end, told her that Calvin Beere did not take Calvin up on his requests for the three of
them to meet to resolve the two men's differences. Scott Moore and Cassidy Miller, two stable hands, testified that they heard Rowntree boast after Calvin was gone that he "got rid of one trainer and I can get rid of another."
¶11 The discord between Rowntree and Calvin continued to fester. In January 2003, its effects spilled over into an encounter between Beere and Calvin involving some pastureland. Calvin testified that, to reduce crowding of the herd, he suggested to Beere opening twenty acres of an alfalfa hayfield to pasture the horses. According to Calvin, Beere initially agreed but did an about-face a few days later because Rowntree convinced him it was too good a hayfield to be used for pasture. Calvin admits he was very upset about this, but denies that he either threatened to quit or gave Beere an ultimatum. Calvin testified that it was not until a few weeks later that he learned through his wife that Beere was going to fire him and that, in fact, the next day Beere did.
¶12 Beere's recollection differed. He testified that Calvin came to his house, and that he "knew [Calvin] was excited" because he did not remove his boots though he had been in the barn. Beere testified that he told Calvin the twenty acres would not be used to pasture the horses because Beere says Calvin insinuated that Beere was lying about Rowntree having no hand in the decision. That "teed [Beere] off" so he "jumped at" Calvin's ultimatum of "either Bruce Rowntree or me," telling Calvin, Whether he quit or was fired, Calvin's employment ended in January 2003.
¶13 At first, Beere kept Terry and Andy on. Then on March 7, 2003, Calvin's attorney sent Beere a letter advising him that Calvin was bringing a
lawsuit. Beere fired Terry and Andy the next day, telling them that he did not need them because he was shutting down the business.
¶14 Beere did shut down the business. In early April 2003, he dissolved Hot Spur Partners, but then, according to his trial testimony, simply reorganized as the similarly named Hot Spur Stables2 and injected nearly $200,000 into the new effort. Hot Spur Stables operated on a larger scale than had Hot Spur Partners, and, Beere testified, basically was "doing the same thing [as] before but with new people." At the time he dissolved Hot Spur Partners, Beere already had begun advertising for a trainer and barn help.
¶15 Hot Spur Partners had, in fact, incurred losses all along: approximately $288,000 in 2000; $363,000 in 2001; and $425,000 in 2002. Beere made additional capital contributions of approximately $1.2 million during this three-year period. Beere disputes Calvin's testimony that he had told Calvin from the outset that he did not want to make money, as he simply needed a tax write-off.
The minutes of a February 11, 2003 meeting of Hot Spur Partners state that Beere was "frustrate[d] with the company's financial losses" and that he was "no longer willing to fund the company's operations with additional capital contributions, and expressed his desire that the company be dissolved and liquidated." When the matter was put to a vote, the vote was 99% of the member interests in favor of dissolution and liquidation and 1% against, consistent with the respective ownership interests of Beere and Calvin. The minutes reflect no discussion of Calvin's quitting or termination. They do indicate, however, that the Operating Agreement was amended to reduce the number of managers of the company from two to one, and that, again by a vote of 99% of member interests to 1%, Calvin was removed as a manager. No explanation for the amendment is given.
¶16 After Hot Spur Partners was dissolved and the business was operating as Hot Spur Stables, Beere transferred ownership of seventeen horses from Hot Spur Partners into his own name. The transfer of ownership was accomplished without Calvin signing off on any of the registration papers and without receiving any payment. United States Trotting Association rules require that horses be raced under the name of the bona fide owner. Beere raced the horses in his name and received the purses when those horses won. Calvin also received no compensation when thirty-eight other horses that had remained titled in the name of Hot Spur Partners were sold or for the foals born to them, or for the 12 ½% of purses won by those foals. Beere's accountant testified at trial that amended K1 tax forms for tax year 2001 were filed a week...
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